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5 ways coronavirus impacting 2019, 2020 tax filings

Federal income tax forms
Posted at 2:04 PM, Jul 13, 2020
and last updated 2020-07-13 20:26:39-04

WEST PALM BEACH, Fla. — The extended deadline to file taxes is Wednesday, but the coronavirus pandemic is not just impacting your 2019 taxes. It's also causing a change in your 2020 filings.

If you've withdrawn from your 401k early because of COVID-19, you won't have to pay a 10% penalty.

Because of the CARES Act, if you've taken a withdrawal on your 401k because of "adverse financial consequences" caused by the coronavirus pandemic, you won't have to pay a 10% penalty.

If you repay the amount withdrawn back into your 401k within three years, there will be no taxes owed on the initial withdrawal.

IRA contributions will help reduce your tax bill.

The annual limit is up to $6,000 and an additional $1,000 for people ages 50 or older.

Any IRA contribution made through July 15 can be applied to 2019.

You can apply for an extension if you need more time to file.

If you need more time to file, complete IRS form 4868 by Wednesday to obtain an extension through Oct. 15.

The extension doesn't mean you will get more time to pay. It just means you will have additional time to file your tax return.

If you owe money, you will still have to pay by Wednesday to avoid a penalty.

Most Americans won't qualify for tax write-offs for working from home.

The home office deduction is only for people who are self-employed and use their home "regularly and exclusively" for business purposes.

Stimulus checks are tax free, but if you claimed unemployment, that's taxable.

Federal stimulus checks are tax free. However, if you claimed unemployment, that's still taxable, meaning you'll owe taxes in 2021.